CBIC notification with respect to Standard Operating Procedure for Scrutiny of GST Returns for FY 2019-20 onwards.

Recent notification issued by CBIC with respect to Standard Operating Procedure (SOP) for Scrutiny of GST Returns for FY 2019-20 onwards.

Earlier CBIC had rolled out a module for automated scrutiny of GST returns. The module enables tax officers to carry out scrutiny of GST returns selected on the basis of data analytics and risks identified by the System. 

Selection of returns for scrutiny will be done by the Directorate General of Analytics and Risk Management (DGARM) based on various risk parameters identified by them. The selected GSTINs (GST Identification Numbers) with the details of the risk parameters, in respect of which risk has been identified for a particular GSTIN, and the amount of tax/ discrepancy involved in respect of the concerned risk parameters (i.e. likely revenue implication), will also be shown on the ACES-GST application i.e scrutiny dashboard of the proper officer for their convenience.

Step 1:- Tax officer would send scrutiny notice to an assessee in GST ASMT-10 with 7 days of final data received from DGARM. 

Step 2:- On receipt of such notice in GST ASMT-10 on common portal, the registered person may accept the discrepancy mentioned in the said notice, and pay the tax, interest and any other amount arising from such discrepancy and inform the same or may furnish an explanation for the discrepancy in Form GST ASMT-11, through the common portal, to the proper officer within the specified time period of 30 days. 

It highlights that if no satisfactory explanation is furnished or the discrepancies are accepted but not paid, the proper officer may proceed with determining the tax and other dues under Section 73 or Section 74 of the CGST Act. 

Section 73 talks about the determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized for any reason other than fraud or any willful-misstatement or suppression of facts. 

 Section 74 First, it is to be determined by the Proper Office in his opinion whether the tax not/short paid etc. is for reason by fraud, willful misstatement, suppression of fact. 

In case no explanation is furnished by the registered person. Reference, if any, to the Audit Commissionerate or the anti-evasion wing of the Commissionerate for action, under Section 65 or Section 66 or Section 67 as the case may be. 

Section 65 Audit, Section 66 Special Audit and Section 67 is regarding Conduct the inspection or search or, as the case may be, seizure of goods, documents, books or things liable to confiscation. 

Why this Sop were issued? 

The SOP provides guidelines for the scrutiny process, including the scrutiny schedule, the process of scrutiny by the proper officer, and the timelines to be followed. It emphasizes conducting scrutiny in a time-bound manner and minimizing the need for physical interaction between the proper officer and the registered person. 

This SoP would bring a uniform and consistent methodology to authorities to perform the scrutiny of returns filed by taxpayers. Now businesses should take a proactive step and prepare requisite reconciliations with intact reasons/ records to substantiate such differences.

Read about GST Amnesty Scheme for Pending GSTR-4 Returns